Protect your business from unexpected disruptions with business interruption insurance - safeguarding your success when unforeseen events try to throw you off course.
Business interruption insurance is a type of insurance that provides coverage for the loss of business income in the event of a disaster, such as a fire or natural calamity. Instead of being sold as a standalone policy, it is typically offered as an add-on or rider to a property/casualty policy or a comprehensive package policy. The premiums for business interruption insurance, including the additional cost of the rider, can be considered as tax-deductible ordinary business expenses. However, it's important to note that this insurance policy only pays out if the cause of the business income loss is covered by the underlying property/casualty policy. The amount payable is generally determined based on the historical financial records of the business.
If a covered loss forces your business to shut down, your interruption insurance can help cover your operating expenses, like:
Lost revenue that would typically be generated if your business were operational.
Payments for mortgage, rent, or lease for the premises where your company operates.
Obligatory loan payments that need to be fulfilled during the interruption period.
Tax payments, whether they are made on a monthly or quarterly basis.
Payroll expenses for your employees.
Costs associated with relocating to a new or temporary location due to physical damages.
Additional expenses incurred if you need to rent alternative space temporarily after a covered loss.
Expenses related to employee training for the use of new machinery or equipment following a covered loss.
Business interruption insurance plays a crucial role in a company's business continuity plan. This type of insurance aims to provide compensation to the insured for the financial consequences resulting from an interruption or interference in their business operations caused by physical damage to their property or other significant external events, such as damages occurring at the premises of suppliers or customers. The primary objective is to restore the business to its original financial state as if the loss had never happened, while considering the specific terms and conditions outlined in the policy.
